A New York supreme court judge granted Mid-Atlantic Sports Network and the Baltimore Orioles a preliminary injunction against the Nationals Monday, preventing the Nationals from threatening to terminate MASN’s license to broadcast their games if they don’t get the money owed under a disputed ruling by a Major League Baseball panel.
After hearing more than three hours of arguments from MASN, the Nationals and MLB in a Manhattan courtroom on Monday, New York Supreme Court Justice Lawrence Marks ruled that the status quo should be maintained while the entire process behind the disagreement is evaluated.
Although no final decision has been reached in the legal battle between the Nationals and MASN, Marks agreed that the Orioles’ questions about the process and allegations of conflict of interest should be examined, essentially a victory for the Orioles, at least for now.
“There is no question regarding the test of a preliminary injunction,” Marks said in his ruling. “The court is to look to the questions of irreparable harm on the likelihood of success on the merits in the balance of the equities. The threat to terminate broadcasting rights virtually immediately is a credible threat and one that can cause irreparable harm.”
All sides will reconvene here on Thursday to discuss the next step with Marks, which could potentially include a trial. In order to keep things as they are, Marks ruled that MASN should post a $20 million bond by Friday, the remaining amount owed to the Nationals under the MLB panel’s ruling.
On June 30, a panel of three major league executives, part of the league’s Revenue Sharing Definitions Committee (RSDC), determined that the Orioles owe the Nationals roughly $60 million in yearly rights fees from MASN, a figure closer to the Orioles’ proposal than the $118 million the Nationals requested.
On Aug. 7, Marks granted a temporary restraining order in favor of MASN, ruling that MLB and the Nationals cannot take further action against MASN and the Orioles in regard to the ruling of MLB’s arbitration panel. That order was set to expire at midnight Monday.
The Nationals have threatened to pull their games off MASN if the network didn’t pay what was ordered.
The judge enjoined both the Nationals and MLB, the first step in challenging the arbitration panel’s ruling. It is believed to be the first time MLB has been enjoined by an entity controlled by one of its teams.
MASN has raised questions about the Nationals’ legal representation, Proskauer Rose. MASN argued that MLB had a conflict of interest because the firm also had represented MLB in several cases and the three teams — the Pittsburgh Pirates, Tampa Bay Rays and New York Mets — who each had a member on the arbitration panel that ruled for higher television rights for the Nationals.
“The fairness of the process is what concerns this court most of all,” Marks said. “The money and responsibilities of parties should not be dramatically changed while that is reviewed.”
For more than three hours, attorneys for all three parties made arguments before Marks. The courtroom in Manhattan was mostly filled and principal owner Ed Cohen, representing the Nationals’ ownership, sat in the back.
The Nationals and Orioles have squabbled over revenue from MASN since the Nationals moved to Washington from Montreal in 2005. Orioles Owner Peter Angelos opposed the relocation because he said it cut into his regional television territorial rights. MLB appeased him with a unique arrangement. He would own a share of the Nationals’ television rights through a regional sports network that broadcast both teams’ games.
Under the terms of the arrangement, the Nationals started with a 5 percent ownership stake in MASN. It has grown to 15 percent and will increase by 1 percent each year until the Nationals own 30 percent. Every five years, there would be a “reset” period allowing the Nationals to receive rights fees commensurate with the formula in the contract.
By fall 2011, the first “reset” period, television rights fees for professional sports teams had exploded. The Nationals and Orioles entered into a bitter dispute over how much MASN owed the Nationals. MASN owes the Nationals $40 million this year in rights fees.
The Orioles have argued the Nationals should honor the contract because the 2005 agreement calls for the use of a rights fee formula developed by Colorado-based consulting firm Bortz Media & Sports Group. The agreement also states the rights fees for the Nationals and Orioles are to be the same, which could affect the viability of MASN if the arbitration ruling is enforced. In court, the Nationals argued that methodology used by the MLB panel was more comprehensive than MASN suggested.